Curious whether Rio Tinto Group is a bargain or just another big name in the market? You are not alone, and now is a great time to get the facts on its real value.
The stock has climbed 13.8% year-to-date and delivered a 16.6% return over the last 12 months. Recent weeks saw a small dip, showing both resilience and sensitivity to market shifts.
This movement has been driven by renewed optimism in global commodities, especially as ongoing infrastructure projects and demand from emerging economies continue to put upward pressure on iron ore prices. A recent surge in environmental investments has also caught investor attention, further influencing Rio Tinto’s position in the materials sector.
According to our valuation checks, Rio Tinto Group scores 5 out of 6 for being undervalued. We will examine this result in more detail by breaking down the numbers with different valuation methods, and later, share an even smarter way to make sense of it all.
Find out why Rio Tinto Group’s 16.6% return over the last year is lagging behind its peers.
A Discounted Cash Flow (DCF) model estimates a company’s true value by projecting its future cash flows and discounting them back to the present. This approach aims to reveal whether the market price is aligned with the business’s earning power over time.
For Rio Tinto Group, recent financials show a last twelve months Free Cash Flow of $7.08 billion. Analysts anticipate strong ongoing growth, with free cash flow projected to rise to $15.26 billion by 2028. Over the coming decade, Simply Wall St extrapolates these trends and projects free cash flow to approach nearly $35.5 billion by 2035. All these projections are provided in the company’s reporting currency, U.S. dollars.
The DCF model values Rio Tinto’s shares at an intrinsic fair value of $189.55, which is 71.4% higher than the current share price. According to this projection, the company appears significantly undervalued compared to where its cash flows are expected to be over time.
Result: UNDERVALUED
Our Discounted Cash Flow (DCF) analysis suggests Rio Tinto Group is undervalued by 71.4%. Track this in your watchlist or portfolio, or discover 920 more undervalued stocks based on cash flows.
RIO Discounted Cash Flow as at Nov 2025
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Rio Tinto Group.
For profitable companies like Rio Tinto Group, the Price-to-Earnings (PE) ratio is a widely used valuation metric because it connects a stock’s current price directly to its earnings power. A lower PE can suggest a bargain, while a higher one might point to high growth expectations or perceived safety. What counts as a “normal” or “fair” PE ratio depends on how much the market expects the company to grow and how much risk is involved. Faster growth or lower risk can justify a higher ratio.
Rio Tinto currently trades at a PE ratio of 11.4x. For context, the global Metals and Mining industry averages about 16.3x, while Rio Tinto’s peer group is even higher at 39.0x. This means Rio Tinto is priced well below both its sector and direct competitors based solely on its trailing earnings.
Simply Wall St’s “Fair Ratio” analyzes what a reasonable PE would be for Rio Tinto by considering its growth outlook, risk profile, profit margins, market cap, and industry dynamics. This proprietary metric is more powerful than a simple peer or sector comparison because it accounts for company-specific strengths and weaknesses, not just where it sits among competitors.
With a Fair Ratio of 23.6x, Rio Tinto’s actual PE is less than half of what Simply Wall St’s model suggests is justified for the business at this time. This large gap points to the stock being undervalued relative to its potential, even after adjusting for unique factors that make Rio Tinto stand out or pose more risk compared to the average miner.
Result: UNDERVALUED
LSE:RIO PE Ratio as at Nov 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1443 companies where insiders are betting big on explosive growth.
Earlier we mentioned that there’s an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is a simple, interactive story that connects your views on a company’s future, such as revenue, earnings, margins, and risk, to a concrete financial forecast and a resulting fair value. Instead of relying solely on formulas or analyst targets, Narratives allow you to express your own perspective on what will drive Rio Tinto Group’s future, whether that’s mining expansion in battery metals or challenges from cost inflation.
This approach makes investing more human and accessible, transforming numbers into living stories. It is available on Simply Wall St’s Community page, where millions of investors share and update their Narratives in real time. By comparing fair values shaped by these stories to the current market price, you get clear, up-to-date information on whether to buy, hold, or sell. Narratives automatically adapt as new information, such as earnings or market news, comes in so your analysis stays relevant.
For example, some investors may see Rio Tinto Group’s aggressive growth in copper and lithium as reason for a high fair value. Others focus on commodity risk and project execution to arrive at a more conservative price, letting you explore both optimistic and cautious scenarios, all grounded in actual financial assumptions.
Do you think there’s more to the story for Rio Tinto Group? Head over to our Community to see what others are saying!
LSE:RIO Community Fair Values as at Nov 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include RIO.L.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
